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British Chancellor of the Exchequer Rachel Reeves says Brexit has damaged the British economy.

What a shocker!

In case you didn’t notice, the last sentence was dripping with sarcasm.

Let me explain why. The Centre for European Research (CER) estimates that British trade with the EU (which remains Britain’s largest trading partner) has shrunk by 10-15 percent since Brexit. There have been trade deals elsewhere, but analysts reckon that for every £10 of EU trade lost, the new deals have contributed only £1 to £1.50.

Foreign investment (FDI) in Britain has been a major factor in Britain’s economic success since the 1970s. Companies have queued up to invest in a country which speaks English, has a good education system, a fantastic culture and history and—most important of all—access to a market of 500 million well-off people. Not surprisingly, foreign investment in Britain has dropped 30 percent since Brexit and moved to the continent.

Why put your money to produce products for 69 million people when the same investment can give you access to 500 million?

Partly as a result of the lack of FDI the economy is reckon to have gown two to three percent more slowly than comparable advanced economies. By the end of this year, economists estimate that the UK GDP will be 4-5 percent smaller than it would have been. This has cost the country tens of billions of pounds.

This money would have been taxed and the taxes could have gone to maintain, possibly even increase welfare spending. No wonder Ms Reeves is contemplating breaking Labour’s manifesto commitment not to raise taxes.

Thirty to forty percent of Britain’s food inflation has been attributed to Brexit; most costly by the increased red tape, customs forms and other barriers at the border.

Wage inflation has been pushed up by the end of the free movement of workers and financial services have lost “passporting rights” to sell directly into the UK. As a result, Amsterdam has overtaken the City of London in the sale of some shares.

It is almost universally agreed that Brexit has been bad for the economy (Nigel Farage excepted). In fact, every poll indicates that most people now think that leaving the EU was a bad idea. But that does not mean they would vote to return to the Brussels fold. And it is questionable that the remaining members of the EU would want us back.

So what can be done to improve relations with Europe—and the British economy—short of membership of the EU or rejoining the Single Market and Customs Union?

Big steps are being made by the Starmer government in foreign policy and defense. Britain is coordinating its policies on Ukraine and the Middle East and is in the process of gaining access to the EU’s defense procurement fund. The latter would be a big boost to Britain’s defense industry with its large number of well-paid jobs.

The two sides could also deepen cooperation on services, improving market access in such areas as the legal profession, financial services, accounting and engineering.

A lot of the drop in trade and rise in inflation is caused by annoying customs forms, customs declarations and hold-ups at the border. This could be alleviated by UK-EU pilots for “trusted traders” who could skip forms and hold-ups at the border.

To ease wage inflation and job shortages, Brussels and London could introduce “temporary visas” for skilled workers and specific sectors of the economy such as health, hospitality and agriculture. The two sides could also introduce improvements to dispute resolution procedures and more joint-industrial projects.

But to start with, both Brussels and London, must accept that they need each other.

The world’s focus is on the eastern edge of Asia this week. It starts with the Association of Southeast Asian Nations (ASEAN) summit in Malaysia this weekend which will include US president Donald Trump.

On Monday he will fly from Kuala Lumpur to Tokyo for his first meeting with Japan’s first woman prime minister, former heavy metal drummer and car enthusiast 64-year-old Sanae Takichi.

The fact that the ruling Liberal Democratic Party has elected a woman as its leader is big news in highly patriarchal Japan.

Ms Takichi has a reputation as a Japanese nationalist and right-wing economist who models herself on Britain’s Margaret Thatcher. She even calls herself Japan’s “Iron Lady” and wears the same blue suits as Mrs T.

Meeting Donald Trump will be Takichi’s first diplomatic test, especially as Trump puts a high premium on personal relationships. When Trump heard of Takichi’s election he said she was “a highly respected person of great wisdom.”

Trump will almost certain be pleased with Takichi’s tough stand on defense. In her first addressed to parliament she announced that Japanese defense spending would increase to two percent of GDP next year instead of in 2027.

However, Ms Takichi is very much a “Japan first” type leader and she and Trump are expected to clash over the US president’s announcement of a 25 percent tariff on Japanese goods. The tariff plans have been pulled back to renegotiation, but the US is determined to protect US car manufacturers by raising prices of Japanese and European cars.

Trump will leave Japan on Wednesday for South Korea and a meeting of the Asia Pacific Economic Community which includes China. Xi Jinping and Donald Trump will have their first face to face since Trump started his second administration. US tariffs and Chinese rare earth minerals will top the agenda.

Donald Trump’s Ukraine policy must be making him dizzy.